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Friday, 11 Mar 2011
EUR Down as Moody's Cuts Euro Zone Credit Ratings
The euro traded near its lowest mark in more than a week against the dollar as concerns over Europe's debt crisis still linger and dampened demand for the region's assets. Moody's, yesterday, slashed their credit ratings of Greece by three notches and Spain's by one, threatening further downgrades if actions are not taken soon, adding momentum to the EUR's recent downtick.
USD - Dollar Gains on US Unemployment Data, Risk Aversion
The US dollar rose against most of it major currency pairs on Thursday after US weekly jobless claims came in worse than expected. The weekly report has had greater impact on trading in recent months due to investor concern that the US economic recovery will remain tepid; creating fewer new jobs to replace those lost during the recession.
As a result of yesterday's jobless report, the USD extended gains versus the EUR to trade around 1.3780 amid a broad sell-off in the EUR from heightened risk aversion. The dollar experienced similar behavior against the GBP, closing at 1.6070 on Thursday.
The number of Americans filing for their first week of unemployment benefits rose last week, pointing to slight downturn in the job market. The number of initial claims rose by 397,000, up 26,000 from a revised 371,000 claims filed the week before.
Looking ahead to today, there are several important news releases coming out of the US. These include the Retail Sales figures and the University of Michigan's (UoM) Prelim Consumer Sentiment report at 13:30 and 14:55 GMT, respectively. These reports are very important and likely to impact the dollar's volatility today. Traders should pay close attention to the market as there is an opportunity to capitalize on the fluctuations which are likely to follow these releases.
EUR - EUR Strength Gouged by Credit Downgrades
The euro fell against most of its major counterparts on Thursday after Moody's ratings agency downgraded Greece and Spain's credit rating, and threatened additional downgrades in the near future. By yesterday's close, the EUR fell against the USD, pushing the oft- traded currency pair to the 1.3780 level. The 17-nation common currency experienced similar behavior against the JPY and closed at 114.50.
Just on Monday, the euro rose above $1.40, when hawkish comments from European Central Bank (ECB) officials fuelled expectations of an April interest rate hike. The fall in the euro helped the dollar pull further away from a 4-month trough against a basket of major currencies. The dollar index rose as high as 77.349, well off the low of 76.124 set on Monday.
As for today, the most important economic indicator scheduled to be released will not arrive from Europe, but rather from Britain and the United States. Traders are advised to follow the Retail Sales figures coming out of the US at 13:30 GMT as they will likely set the pace for the region's troubled market prior to the week's close.
JPY - Japanese Yen Mildly Bullish vs. Rivals
The Japanese yen completed yesterday's trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the CHF yesterday and closed its trading session around the 88.90 level. The JPY saw bullishness against the EUR as it jumped around 90 points and closed at 114.50.
As for today, the JPY's trends will be affected by the rallies of its primary currency pairs. It seems the USD and EUR are expected to continue volatile trading sessions today and their crosses with the JPY will likely be as well. Traders should keep a close look on the news coming from the US and Britain as these economies will be the deciding factors in the JPY's movement today.
Crude Oil - Crude Oil Slides below $103 a Barrel
Crude Oil prices were down slightly during yesterday afternoon, trading just under $103, after spending the day alternating between gains and losses as investors were reluctant to commit to purchases while Moody's continued to threaten further credit downgrades in Europe.
Traders also appeared to continue worrying about the possibility that China might raise interest rates again soon. As for today, the US Retail Sales figure and Prelim UoM Consumer Sentiment report will likely determine crude's next price moves. Positive figures could help inject some needed risk taking that would lower the USD and push oil prices up slightly.
The EUR/USD went increasingly bearish yesterday, and currently stands at the 1.3820 level. The daily chart's Stochastic (slow) supports this currency cross to fall further today. The weekly chart's Stochastic (slow) supports this notion. Entering short on the pair appears preferable today.
The 4-hour chart is showing mixed signals with its RSI fluctuating in the neutral territory. However, there is a fresh bullish cross forming on the daily chart's Stochastic (slow) indicating that a bullish correction might take place in the nearest future. In that case, traders are advised to go long after the impending swing.
The pair has been range-trading for a while now, with no specific direction. The daily chart's Stochastic (slow) is providing us with mixed signals. The 4-hour chart does not provide a clear direction either. Waiting for a clearer sign on the hourlies might be a good intra-day strategy today.
Range-trading within a minor bullish channel on the 4-hour chart continues. Both the daily RSI and Stochastic (slow) are floating in neutral territory. However, the pair currently sits near the bottom border of the hourly chart's RSI, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be a preferable strategy.
The Wild Card
Silver's price spike appears to be losing momentum lately. The daily chart's RSI and Stochastic (slow) show the price descending out of the over-bought region, representing downward momentum. Forex traders may also take note that the weekly chart's RSI has recently breached the over-bought region and a bearish cross appears to have just formed on the Stochastic (slow), supporting the notion of a downward correction. Going short may turn out profitable before the week's close.
|00:30||AUD||AIG Manufacturing Index||47.3||*||-|
|00:50||CAD||Tankan Manufacturing Index||12||11||-|
|00:50||JPY||Tankan Non-Manufacturing Index||19||17||-|
|01:00||EUR||German 10-y Bond Auction||1.05|1.4||*||-|
|01:00||GBP||10-y Bond Auction||-||-||-|
|USD||Total Vehicle Sales||17.5M||16.9M||-|
|02:35||JPY||Final Manufacturing PMI||51.7||51.7||-|
|08:15||EUR||Spanish Manufacturing PMI||52.8||52.3||-|
|08:45||EUR||Italian Manufacturing PMI||49.8||49.4||-|
|09:00||EUR||Final Manufacturing PMI||50.5||50.5||-|
|13:15||USD||ADP Non-Farm Employment Change||204K||206K||-|
|14:45||USD||Final Manufacturing PMI||57.9||58.0||-|
|15:00||USD||ISM Manufacturing PMI||58.0||56.8||-|
|15:00||USD||ISM Manufacturing Prices||58.0||58.6||-|